BSP Governor Amando Tetangco also told reporters that he did not expect to see more monthly balance of payments deficits after a $ 248 million shortfall in June as the country, like others globally, feels the impact of rising imports costs.

‘’Given the current inflation environment, and given that there are still risks to the outlook, interest rate hikes cannot be ruled out at this point,’’ he said.

Tetangco’s comments are more forceful than previous pronouncements, which simply emphasized that the central bank would take decisive action when necessary to combat inflation that is being fuelled by rising raw materials and food prices.

The monetary authority raised rates by an aggressive 50 basis points last week to rein in annual inflation, which hit a 14-year high of 11.4 percent in June -- the second rate hike in a row.

The overnight borrowing rate stands at 5.75 percent and the overnight lending rate at 7.75 percent.

The central bank has said double-digit inflation should continue into the first quarter of 2009 and that annual price increases would start to ease only after peaking at slightly over 12 percent.

The Asian Development Bank warned on Tuesday that central banks of emerging market economies in the region were moving too slowly to combat inflation.